SMEs focusing on survival as bank finance remains tight |
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| Finance | |
| Written by Gary Howes | |
| Friday, 15 January 2010 | |
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80% expect to maintain or increase sales turnover in the first half of 2010 – up from 57% a year ago. The third survey of SMEs from QBE, the specialist business insurer, shows that the economic climate continues to challenge the UK’s principal business base, with more than one in five, 21%, of SMEs saying they would find it difficult to survive if current conditions were to persist. Individual businesses to recover ahead of the national economyDespite these pressures, the survey illustrated that 80% of the UK’s SMEs expect to either maintain or increase sales turnover in the first half of 2010. This is particularly promising given that only 57% had this expectation a year ago. When asked how long they thought it would be before the national economy recovers from the recession, the majority, 58%, said it would not be before 2011 and only 4% anticipated it would happen in the first half of 2010. Conversely, it seems that SMEs in the UK are more optimistic for the recovery of their own businesses, with over a quarter, 26%, saying that their business has already bounced back from the recession and a further third, 33%, saying they expected recovery in 2010. Growth plans stalled by lack of commercial credit Although the majority of UK SMEs anticipate solid 2010 turnover and swift individual recovery from the recession, the survey found that the focus of these enterprises continues to be on staying afloat rather than investing in growth with over half saying that did not plan to invest in their business in the first half of 2010. Undoubtedly this cautious approach is the result of ongoing concerns over the stability of the national economy, but the survey indicated it may also be caused by uncertainty over current availability of commercial credit, with only 9% of SMEs saying it would be easy to access commercial credit. Only 6% said they would fund investment with a bank loan, a statement that is underpinned by the belief of two thirds, 66%, of UK SMEs that banks are stalling sound business propositions by holding back from lending. The survey identified that the UK’s SMEs are concerned that other business issues may also be on the rise. The majority said they expect competitors reducing prices, taxation issues and increased costs from suppliers to increase as business risks over the first half of 2010. Drop in unemployment will signal lasting recovery When asked which economic changes would signal national economic recovery, an upward trend in property prices (77%), an upward trend in world stock market indices (78%) and a downward trend in unemployment figures (79%) were the most likely to be seen by businesses as a strong sign of a recovery. Terry Whittaker, Managing Director, National Division, QBE European Operations, commented: “Small to medium sized enterprises make up the bulk of British business and they are, therefore, crucial to the well-being of the economy. It is encouraging to see that they have weathered the storm well and are optimistic for 2010 but, as conditions improve, the focus will turn from survival to business development and we should encourage growth in this key area of our national economic structure.”
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